Alborn Construction v. Alaska: Court Upholds Public Works Ruling

The case of Alborn Construction, Inc. v. State of Alaska involved a dispute over prevailing wage requirements under Alaska’s "Little Davis-Bacon Act." Alborn Construction, Inc. challenged the Alaska Department of Labor & Workforce Development’s determination that a renovation project on a state-leased office building fell under the prevailing wage statute for public construction projects. The Supreme Court of Alaska upheld the agency’s decision, affirming that the entire project was subject to prevailing wage laws.

Background and Legal Issues

Alborn Construction was contracted to renovate a building leased by the State of Alaska for the Department of Transportation and Public Facilities (DOT&PF). The state had leased the building from Juneau I, LLC since 1984 and negotiated an amendment to the lease requiring extensive renovations, including Americans with Disabilities Act (ADA) compliance upgrades, window installations, and other state-specified improvements. The amendment also significantly raised the state’s rent following the completion of renovations.

The Alaska Department of Labor determined that the renovations constituted "public construction" under the Little Davis-Bacon Act, requiring prevailing wages for workers. Alborn contested this determination, arguing that:

• The project was privately funded, as the state did not directly pay for the renovations.
• The lease agreement should not subject the renovations to prevailing wage laws.
• The agency inconsistently applied the law and should be estopped from enforcement.

The Department of Labor found that the lease agreement and required renovations were structured to circumvent wage requirements, concluding that the entire project was covered by the prevailing wage law.

Court’s Analysis and Findings

The Supreme Court of Alaska reviewed whether the renovations constituted "public construction" under state law. The court held that:

• The nature of the contract supported prevailing wage coverage because the state was a party to the lease amendment requiring the renovations.
• The renovations served a public purpose since they were designed to meet the specific needs of a state agency.
• The state maintained significant control over the project, as it specified the improvements and would remain the sole tenant of the building for at least ten years post-renovation.
• The lease’s financial structure effectively funded the renovations through increased rental payments, materially defraying construction costs.
• Attempts to evade prevailing wage laws were improper, and the revised lease amendment was deemed a "sham contract" designed to avoid the application of wage requirements.

Additionally, the court rejected Alborn’s estoppel argument, holding that the Department of Labor’s initial determinations were subject to revision as new facts emerged. The agency’s enforcement action was found to be consistent with the law and its duty to protect workers’ wages.

Conclusion and Ruling

The Supreme Court of Alaska upheld the Department of Labor’s decision, affirming that the entire renovation project was subject to prevailing wage requirements under the Little Davis-Bacon Act. The ruling reinforces the broad application of prevailing wage laws to projects where state involvement is significant, even when direct state funding is not explicitly provided.

Legal Guidance for Government Contracting and Compliance

Understanding prevailing wage requirements is essential for businesses involved in government-funded projects